Income Tax (Trading and Other Income) Act 2005 section 217

Conditions for basis period to end with new accounting date

Section 217 sets out the conditions that must be satisfied for a change of accounting date to be effective for tax purposes, including notification requirements, a maximum period length, and either a "no recent change" or a "commercial reasons" test.

• The trader must notify HMRC of the change of accounting date in the relevant tax return, filed on or before the filing deadline.
• The period of account ending on the new accounting date must not exceed 18 months.
• Either there must have been no effective change of accounting date in the previous five tax years (Condition A), or the change must be for genuine commercial reasons stated in the notice (Condition B).
• Where neither the "no recent change" test nor the "commercial reasons" test is met, the change of accounting date will not be accepted for tax purposes.